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Fed's Powell says 'time has come' to cut interest rates

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Small caps, regional banks surge

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Workday jumps after Q2 revenue beat, $1 bln share buyback

plan

(Updates to market close)

By Stephen Culp

NEW YORK, Aug 23 (Reuters) - U.S. stocks rallied on

Friday as dovish remarks from U.S. Federal Reserve Chair Jerome

Powell solidified expectations that the central bank will cut

its key policy rate in September.

In highly anticipated comments before the Jackson Hole

Economic Symposium, Powell said "the time has come" to lower the

Fed funds target rate, and "the upside risks of inflation have

diminished."

"We do not see or welcome further weakening in labor market

conditions," Powell added in a speech that appeared to all but

guarantee a rate cut at next month's policy meeting, which would

be the first such cut in over four years.

"The long wait is over," said Ryan Detrick, chief market

strategist at Carson Group in Omaha, Nebraska. "This was the

dovish shift that market participants have been waiting for."

"The Fed is clearly turning to the dovish camp and Powell

has made it crystal clear that September will be the start of

multiple rate cuts coming the remainder of this year," Detrick

added.

All three major U.S. stock indexes jumped following the

release of Powell's prepared remarks, with megacap growth stocks

providing the most muscle.

Small caps and regional banks handily outperformed

the broader market.

"Financials are at an all-time high, with a huge surge from

regional banks," Detrick said. "One would think if a major

calamity or a recession were on the horizon, regional banks and

financials wouldn't be a strong as they've been."

All three indexes logged weekly advances, standing on the

shoulders of last week's largest Friday-to-Friday percentage

gains of the year.

Next week, the data-dependent Fed will have a raft of

economic indicators to consider ahead of its September rate

decision, including the Commerce Department's revised

second-quarter GDP and its broad-ranging Personal Consumption

Expenditures (PCE) report, which includes the Fed's preferred

inflation yardstick, the PCE price index.

According to preliminary data, the S&P 500

gained 62.79 points, or 1.13%, to end at 5,633.43 points,

while the Nasdaq Composite gained 258.44 points, or

1.47%, to 17,877.17. The Dow Jones Industrial Average

rose 462.76 points, or 1.14%, to 41,168.47.

Workday beat quarterly revenue expectations and

announced a $1 billion stock buyback plan, sending shares of the

human resources software firm surging.

Ross Stores ( ROST ) advanced after the discount retailer

raised its fiscal 2024 profit forecast.

Turbo Tax's parent Intuit sagged in response to

disappointing quarterly revenue.